French factory decline even worse than Greece

New orders dry up and overseas demand falls, as output contracts in France at
an even faster rate than in troubled Greece

Output at French factories fell for a ninth consecutive month in February, as new orders dried up and overseas demand fell. This led to a further fall in employment, as companies reduced their stocks, despite cheaper input costs linked to lower oil pricesPhoto: PA

The economic divide between Europe's largest economies widened in February, as a closely-watched survey showed manufacturing output in France contracted at a faster rate than Greece, despite the weakening euro.

Output at French factories fell for a ninth consecutive month in February, as new orders dried up and overseas demand fell. This led to a further fall in employment, Markit said, as it described general demand in France as "lacklustre".

By contrast, a stronger rise in new business helped output at German manufacturers expand for the 22nd consecutive month in February. Markit described the latest rise as "broad-based", but said growth was "weak by historical standards".

Despite an 8pc decline in the euro against the dollar since the start of the year, Markit's French manufacturing PMI fell to 47.6 in February, from 49.2 in January.

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This was well below the 50 level that divides growth from contraction, and also worse than economists' expectations of a decline to 47.7. This also means output in France contracted at a faster rate than in Greece last month, where the decline steadied to 48.4.

Germany's PMI rose to 51.1 in February, up marginally from January’s reading of 50.9.

Jack Kennedy, senior economist at Markit, said French manufacturing was in a "funk".

Chris Williamson, Markit's chief economist, added: “France, Greece and Austria are the slow lane stragglers [in Europe], with all three seeing their manufacturing economies contract again in February. France is the most worrying, not just because it trails behind all other countries, but it is also the only country seeing a steepening downturn."

Ireland was the eurozone's bright spot last month, as the country recorded the joint-fastest rate of job creation on record.

Output rose to the highest level in 15 years, which helped to keep overall eurozone manufacturing output steady in February. The eurozone manufacturing PMI was unchanged, at 51.